Pakistan's economy has recovered from years of sluggishness, caused primarily todroughts, with 

growth experienced
in the agriculture, industry and service sectors. Infiscal year (FY) 2004/2005 (ending in June), Pakistan
achieved gross domestic product (GDP) growth of 8.4 percent and in 2005/2006 the country had GDP growth of 6.6
percent. High inflation (9.1 percent) in 2004/2005 was attributed to escalatingoil prices, higher housing rents and
food item shortages. In an effort to decrease inflation, the central bank of Pakistan announced that it would
raise interest rates. The strategy worked, with inflation decreasing to 7.6 percent by the end of FY 2005/2006.
The International Monetary Fund (IMF), and the World Bank, both major donor organizations to Pakistan, have
acknowledged the favorable performance and progress in Pakistan’s structural reforms, but have stressed even
greater reform in the public institutions and the public energy sector where progress has been slow. In 2004, the IMF
approved a fresh loan of nearly $250 million as part of its overall $1.5 billion aid package to Pakistan. In 2005, the
United States began the first installments of a $3 billion aid package, which will continue through 2010. In 2006, the
World Bank approved loans of $185 million for various reform and infrastructure projects, in addition to the nearly
$850 million loaned to the country in 2005.
The devastating earthquake that stuck Pakistan in October 2005 destroyed lives and caused considerable damage to
the country’s infrastructure. However, the majority of the damage occurred in rural areas of the country and had
minimal impact on the economy. Furthermore, international aid inflows in the aftermath of the earthquake have
served to bolster Pakistan’s economy. The United States pledged $510 million for rebuilding Pakistani
infrastructure, but relief coordinators estimate that Pakistan will need billions of dollars and up to ten years to fully
rebuild.Pakistan and India decided to extend aid to one another after the earthquake. They also agreed to continue
confidence building measures, which include the notification of missile testing, creating new bank branches and
increasing the number of airline destinations in both countries.

Energy Overview
In recent years, the combination of rising oil consumption and flat oil production in Pakistan has led to rising oil
imports from Middle East exporters. In addition, the lack of refining capacity leaves Pakistan heavily dependent
on petroleum product imports. Natural gas accounts for the largest share of Pakistan’s energy use, amounting to
about 50 percent of total energy consumption. Pakistan currently consumes all of its domestic natural gas
production, but without higher production Pakistan will need to become a natural gas importer. As a result, Pakistan
is exploring several pipeline and liquefied natural gas (LNG) import options to meet the expected growth in natural
gas demand. Pakistan’s electricity demand is rising rapidly. According to Pakistani government estimates,
generating capacity needs to grow by 50 percent by 2010 in order to meet expected demand.
Oil

Pakistan Oil Production and Consumption, 1986-2006 (2006 is forecast). (Source: EIA International Energy Annual 2004)

According to Oil and Gas Journal (OGJ), Pakistan had proven oil reserves of 300 million barrels as of January
2006. The majority of produced oil comes from proven reserves located in the southern half of the country, with the
three largest oil-producing fields located in the Southern Indus Basin. Additional producing fields are located in the
Middle and Upper Indus Basins. Since the late 1980s, Pakistan has not experienced many new oil fields coming
online. As a result, oil production has remained fairly flat, at around 60,000 barrels per day (bbl/d). During the first
eleven months of 2006, Pakistan produced an average of 58,000 bbl/d of crude oil. However, Pakistan has ambitious
plans to increase its current output to 100,000 bbl/d by 2010. Due to Pakistan’s modest oil production, the country is
dependent on oil imports to satisfy domestic oil demand. As of November 2006, Pakistan had consumed
approximately 350 thousand barrels of oil and various petroleum products, of which more than 80 percent was
imported. The majority of oil imports come from the Middle East, with Saudi Arabia as the lead importer.
Sector Organization
Pakistan’s Ministry of Petroleum and Natural Resources regulates the country’s oil sector. The Ministry grants oil
concessions by open tender and by private negotiation. To encourage oil sector investment, the Ministry has offered
various tax and royalty payment incentives to oil companies. Pakistan’s three largest national oil companies (NOCs),
include the Oil and Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and
Pakistan State Oil (PSO). All three operate under joint ventures and partnerships with various international oil
companies (IOCs) and other domestic firms. Major IOCs operating in Pakistan include BP (UK), Eni (Italy), OMV
(Austria), Orient Petroleum Inc. (OPI, Canada), Petronas (Malaysia) and Tullow (Ireland).
Privatization
In response to conditions laid down by lenders, such as the International Monetary Fund (IMF) and the World Bank,
Pakistan continues to strive for privatization of its state-owned companies. For instance, the government has on offer
a 51 percent stake in PPL, as well as a 54 percent stake in PSO. PPL owns the Sui fields in Balochistan, as well as
exploration interests in 22 blocks, while PSO holds a majority share in the domestic diesel fuel market with more
than 3,800 retail outlets. In November 2006, Pakistan plans to have a share issue from OGDCL for the equivalent of
15 percent of the NOCs capitalization. Five percent of the company was previously divested in November 2003 in
an initial public offering (IPO). Pakistan hopes to reap significant revenues from these privatizations over the next
several years.

Exploration and Production

BP is the largest oil producer in Pakistan, with production averaging approximately 30,000 bbl/d. The oil major
operates 43 fields and more than 100 wells throughout the country. OGCDL is Pakistan’s second-largest oil
producer, with average production at 25,000 bbl/d. While there is no prospect for Pakistan to reach self-sufficiency
in oil, the government has encouraged private (including foreign) firms to develop domestic production capacity. In
2005, NOCs and IOCs drilled a total of 29 onshore development wells in Pakistan. BP led the development by
drilling ten wells in its Lower Indus Basin acreage, while ODCGL drilled nine wells, with the majority being on its
acreage in the Middle Indus Basin. PPL expanded its interests in 2005, by drilling offshore at the Pasni X2 shallow
water field. It was the first time a Pakistani oil company had explored offshore.

Licensing Rounds
Historically, Pakistan has held few large licensing rounds, and instead, has conducted private negotiations for
acreage between individual companies and the Ministry of Petroleum and Natural Resources. In February 2006,
Pakistan opened a rare licensing round offering nine onshore and offshore blocks. From the blocks offered, the
Pakistani government awarded OGDCL three exploration licenses in the southern Sindh and Balochistan provinces.
The licenses cover the Tegani, Thal and Than Beg Blocks and OGDCL has committed to conducting geological
surveys and to drilling four exploration wells on the blocks. In June 2006, the government awarded POL an
exploration license for the Kirthar Block in southern Pakistan. In July 2006, Pakistan awarded BP three blocks (U,
V, and W) in the offshore Indus Delta region.

Downstream
Pakistan's net oil imports are projected to rise substantially in coming years as demand growth outpaces increases
in production. Demand for refined petroleum products also exceeds domestic oil refining capacity, so nearly half of
Pakistani oil imports are refined products. Pakistan’s largest port is located at Karachi, which serves as the principle
point of entry for oil imports. PSO leads Pakistan's fuel distribution market, with its main storage facilities located at
Port Mohammed Bin Qasim.
Refining
Pakistan has five refineries, with total refining capacity of just under 270,000 bbl/d. The largest of the refineries is
the Pak-Arab Refinery Complex (PARCO), which became operational in late 2000, with 95,000 bbl/d of refining
capacity. In July 2004, Bosicor Pakistan Limited (BPL) began commercial operations at its Mouza Kund plant, near
Karachi. The 30,000-bbl/d refinery is supplied with shipments of crude oil from Qatar. The plant allowed Pakistan
to become a supplier of naphtha, which constitutes 20 percent of the output. The plant produces about 10,000 bbl/d
of fuel oil, 6,000 bbl/d of diesel, and 5,500 bbl/d of naphtha, among other products. PSO has a supply contract to
purchase the entire output of BPL's products for the next 10 years. In June 2006, Kuwaitagreed to fund a $1.2 billion
oil refinery, which would have a planned capacity of 100,000 bbl/d. The refinery would be located at Port Qasim in
Karachi.
Natural Gas

Pakistan Energy Supply Mix, 2005. (Source: Pakistan Energy Yearbook, 2005)

According to OGJ, Pakistan had 28 trillion cubic feet (Tcf) of proven natural gas reserves in 2006. The bulk of
these reserves are located in the southern half of Pakistan. In 2004, Pakistan produced and consumed 968 billion
cubic feet (Bcf). In light of the current onshore exploration activities and resource outlook, the Pakistani government
expects minor increases in natural gas production in the short-term. However, natural gas production is expected to
decline over the next 15-25 year period, while natural gas demand is expected to increase. The Pakistani government
is currently developing plans to import additional natural gas (see "Proposed Pipelines" below) in order to satisfy
increasing demand. According to the Pakistan Energy Yearbook, natural gas is currently the country’s largest energy
source, making up 50 percent of Pakistan’s energy mix in FY 2004/2005.
Sector Organization
Pakistan’s state-owned PPL and OGDCL produce around 30 percent and 25 percent, respectively, of the
country’s natural gas. The two companies are the country’s largest natural gas producers. OMV is the largest foreign
natural gas producer (17 percent of total country’s production) in Pakistan. Additional foreign operators include BP,
Eni, and BHP Billiton. The Pakistani government has enacted numerous policies to encourage private sector
leadership of natural gas development, including privatization of state-run businesses, regulation that encourages
competition and tax incentives geared towards increasing exploration and production.

Exploration and Production

Pakistan’s largest natural gas production occurs at the Sui field, which is located in the Southern Indus Basin. PPL
operates Sui field, with production averaging 655 Mmcf/d. Additional producing fields include Mari (446 Mmcf/d),
Sawan (366 Mmcf/d), and Bhit (316 Mmcf/d). In 2005, BHP Billiton signed a Gas Sales and Purchase Agreement
(GSPA), in which the company will supply an additional 150 million cubic feet per day (Mmcf/d) of natural gas
from its Zamzama field. BHP Billiton will complete phase II development of Zamzama in the third quarter of 2007.
Petronas brought its Rehmat field online in March 2005. The field produces an estimated 30 Mmcf/d, which is sold
to consumers in Pakistan’s southern Sindh province. In the past few years, the country discovered seven new natural
gas fields. The Pakistani government expects the development of these new fields to add an additional 1 Bcf/d to
Pakistan's natural gas production.

Proposed Pipelines
Pakistan Oil Production and Consumption, 1986-2006 (2006 is forecast). (Source: Ministry of Petroleum and Natural Resources-Pakistan)

Pakistan’s government is working on plans to build a pipeline that spans fromIran’s massive natural gas reserves to
Indian markets across Pakistani territory. In August 2006, Iran and Pakistan extended a previously signed (April
2005) memorandum of understanding (MoU) until 2007. One of the main concerns for both Pakistan and India is
how much Iran will charge for the natural gas. To help mediate the pricing issue, the three countries appointed an
international consultant this past summer. Iran has offered to cover 60 percent of the construction costs of the
pipeline and Pakistani officials have stressed their ability to safeguard the pipeline. Pakistan could earn about $70
million annually in transit fees from the pipeline. If India decides to forego its part in the pipeline project, Pakistan
and Iran have agreed to work on a bilateral Iran-Pakistan pipeline project.
A second natural gas import possibility that has been considered is an eventual link to the Dolphin Project in Qatar.
This plan would supply natural gas from Qatar's North Dome field to Pakistan via a sub sea pipeline fromOman.
Even though Pakistan has signed a preliminary agreement to eventually purchase natural gas from Qatar, it remains
to be seen if further action on the project will be taken.
A third natural gas pipeline option that has been discussed is a line from Turkmenistan to Pakistan via Afghanistan.
Pakistan faces various hurdles with this option, which include the security situation in Afghanistan and the price
Turkmenistan would charge for the natural gas. In addition, completed feasibility studies on the project, funded by
the Asian Development Bank (ADB), indicate that the Turkmenistan field of Daulatabad will only be able to supply
a portion of the natural gas needed by Pakistan.
Liquefied Natural Gas (LNG)
In addition to natural gas import pipelines, Pakistan is pursuing liquefied natural gas (LNG) import options to
meet energy needs. In October 2006, United Arab Emirates-based Dana Gas and its partners, Single Buoy Moorings
and the Granada Group signed a MoU to build an LNG import facility, with 3.5 million tons per year capacity. The
facility would be completed in 2010 and would be located at Port Qasim, near Karachi.

Coal

Pakistan Coal Production and Consumption, 1984-2004. (Source: EIA International Energy Annual 2004)
Coal currently plays a minor role in Pakistan’s energy mix, although the country contains an estimated 3,362 million
short tons (Mmst) of proven recoverable reserves. Pakistan produces small amounts of coal, 3.5 Mmst in 2004, and
imports additional coal, 1.7 Mmst in 2004, to satisfy demand. Recently, the discovery of low-ash, low-sulfur lignite
coal reserves in the Tharparkar (Thar) Desert in Sindh province, estimated at 1,929 Mmst, has increased both
domestic and foreign development interest. China, which began developing various electric power plants in tandem
with the coal mines in 1994 in Pakistan, has shown the most interest in the Thar region. However, several factors
have hindered development of the Thar coal reserves, including the depth and moisture level of the lignite reserves,
a scarcity of fresh water, and lack of road and power infrastructure.
Electricity

Top Asian Electricity Generation and Consumption, 2004. (Source: EIA International Energy Annual 2004)

Pakistan had 20.4 gigawatts (GW) of installed electric generating capacity in 2004. Conventional thermal

plants using oil, natural gas, and coalaccount for about 66 percent of Pakistan’s capacity, with hydroelectricity
making up 32 percent and nuclear 2 percent. The Pakistani government estimates that by 2010, Pakistan will have to
increase its generating capacity by more than 50 percent to meet increasing demand. In 2004, Pakistan generated
80.2 billion kilowatt-hours (Bkwh) of electricity while consuming 74.6 Bkwh. Pakistan's total power generating
capacity has increased rapidly in recent years, due largely to foreign investment, leading to a partial alleviation of
the power shortages Pakistan often faces in peak seasons. However, much of Pakistan’s rural areas do not have
access toelectric power and about half the population is not connected to the nationalgrid. Rotating blackouts ("load
shedding") are also necessary in some areas. In addition, transmission losses are about 30 percent, due to poor
quality infrastructure and a significant amount of power theft.
Sector Organization
The electric power sector in Pakistan is operated by the Water and Power Development Authority (WAPDA), and
the Karachi Electricity Supply Corporation (KESC), with additional generation contribution from Independent
(private) Power Producers (IPPs). WAPDA is responsible for supplying power to all of Pakistan, with the exception
of Karachi, which is supplied by KESC. Currently, 15 IPPs operate in Pakistan under a Build-Own-Operate (BOO)
basis. The National Electric Power Regulatory Authority (NEPRA) regulates the power sector in Pakistan, which
includes power generation, transmission and distribution. NEPRA is also responsible for determining electricity
rates in Pakistan.

Disputes over rate adjustments are common within the industry. For example, in July 2004, NEPRA announced
that electricity rates would be lowered for domestic, industrial and agricultural customers in the three distribution
areas of Hyderabad, Peshawar, and Quetta. The affected distribution companies complained that, due to lower rates,
they would be unable to cover their operating costs. NEPRA advised the federal government to subsidize the
providers at a cost of around $24 million. WAPDA is at the center of a public sector "circular debt" problem, in
which state firms and government ministries have failed to pay power bills, while WAPDA has failed to meet
obligations to them and to private sector creditors, especially state-owned PSO.
Privatization
Pakistan's Electricity Generation, by Source, 1984-2004. (Source: EIA International Energy Annual 2004)

The Pakistani government continues to seek reform in the state-held electric companies. In November 2005, the
Privatization Commission in Pakistan sold KESC to Hassan Associates, a group of local and Saudi investors. KESC
controls a power transmission network in the southern part of Karachi. Because KESC has struggled to make
a profit, the Pakistani government has supported the company with a $200 million annual subsidy. But, Hassan
Associates has indicated that they are confident in their ability to make a profit from KESC in the future. The
Pakistani government will maintain a 26 percent share of the company. Plans have also been made to transform
WAPDA into three generation companies, eight distribution companies and a transmission entity with the hope of
seeing it privatized.

Hydroelectricity
Hydroelectric power represents a third of Pakistan’s power source, however, periodic droughts affect the availability
of hydropower production. WAPDA controls the country’s major hydroelectric plants, with the largest being the
Tabela plant at 3,046 megawatts (MW) installed capacity. The Tabela plant was the largest hydroelectric plant
in Asia until China began building the Three Gorges project, which will have 18,000 MW of installed capacity.
Additional hydroelectric plants in operation include Mangla (1,000 MW), Warsak (240 MW), and Chashma (184
MW).
Although Pakistan has plans to develop additional hydroelectric generating capacity, infrastructure constraints, such
as access roads in mountainous regions and resettlement costs of affected populations have stalled progress.
Nevertheless, Eden Enterprises is going ahead with its Suki Kinari (655 MW) hydropower project. Eden Enterprises,
along with Pakistani partners own 95 percent of S.K. Hydro, which was given a 35-50 year concession period for the
power plant. Construction is expected to begin in 2009, with the plant coming online in 2011. The Private Power
and Infrastructure Board (PPIB) is currently reviewing six additional hydropower projects for the Swat River. If
approved, the projects would provide several hundred MW of additional hydroelectric power capacity to the
country.

Conventional Thermal
WAPDA operates the majority of thermal power plants in Pakistan, with over 5,000 MW of installed capacity in its
control. The Guddu plant is the largest plant operated by WAPDA, with a capacity of 1,650 MW. In recent years,
growth in Pakistan’s thermal power generation has come primarily from new independent power producers (IPPs),
some of which have been funded by foreign investors. The two largest IPPs in Pakistan are Kot Addu (1,600 MW)
and Hubb River (1,300 MW), both of which supply power to WAPDA. The Kot Addu plant was privatized in 1996
(from WAPDA). International Power holds a 36 percent equity stake in the Kot Addu plant. The Pakistani
government has recognized that the majority of thermal plants in the country are run on fuel oil and produce
considerable amounts of pollution. In an effort to reduce pollution, the government would like to see fuel oil-power
plants converted to natural gas in the future.
Other Renewables
Pakistan is working to expand the use of renewable energy to help bridge the gap of energy deficiency in the
country. In 2003, the Pakistani government created the Alternative Energy Development Board (AEDB). AEDB’s
primary objective is to help Pakistan achieve a 10 percent renewable energy share in the country’s energy mix.
AEDB is working to create an environment in Pakistan that is conducive to investment from the private sector in
renewable energy. In July 2006, Turkish-based Zorlu Energji Grubu signed a letter of intent to install a 50-
 MW wind farm. Zorlu would operate the wind farm for 20 years once the project is completed in 2008. Zorlu has
indicated that it would like to install an additional 2,000 MW of renewable energy capacity in Pakistan by 2015.
Nuclear
Pakistan has one nuclear power plant, Chashma-1, with 300 MW of installed capacity. The Pakistan Atomic Energy
Commission operates the nuclear plant. Pakistan is currently working on second nuclear power plant (Chashma-2),
with the help of China National Nuclear Corporation. The plant will have 325 MW of installed capacity and could
be completed by 2009.
Environmental Issues
In Pakistani cities, widespread consumption of low-quality fuel, combined with a dramatic expansion in the number
of vehicles on the roads, has led to significant air pollution problems. Lead and carbon emissions are major air
pollutants in urban centers such as Karachi, Lahore, and Islamabad. A lack of energy efficiency standards has
contributed to Pakistan’s high carbon dioxide intensity. One hopeful trend is that Pakistan has increasingly been
using compressed natural gas (CNG) to fuel vehicles. Currently, government vehicles and taxis that have been
using liquefied petroleum gas (LPG) are being converted to CNG.
Further Reading
 Bosicor Pakistan Limited
 CIA World Factbook – Pakistan
 EIA - Country Information on Pakistan
 Karachi Electricity Supply Corporation (KESC)
 Official Pakistan Government site
 Pak-Arab Refinery, Ltd.
 Pakistani National Electricity Power Regulatory Authority (NEPRA)
 Privatization Commission of Pakistan
 Private Power and Infrastructure Board (PPIB)
 Water and Power Development Authority (WAPDA)

Disclaimer: This article is taken wholly from, or contains information that was originally published by, the Energy Information Administration. Topic editors and authors for the
Encyclopedia of Earth may have edited its content or added new information. The use of information from the Energy Information Administration should not be construed as support for
or endorsement by that organization for any new information added by EoE personnel, or for any editing of the original content.

Citation
Eia (Content Source);Langdon D. Clough (Topic Editor) "Energy profile of Pakistan". In: Encyclopedia of Earth.
Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and
the Environment). [First published in the Encyclopedia of Earth March 13, 2008; Last revised Date March 13, 2008;
Retrieved April 5, 2011 <http://www.eoearth.org/article/Energy_profile_of_Pakistan>